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Homework

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Due for class next Monday 11/29

Homework: 10-63 (Create cash budget), 10-69, 10-73

Supplemental problem(s) posted to Blackboard

Final Exam take-home portion (submitted to digital drop box

by 9am)

Ch 10 Budgets and Variance Analysis

Cash Collections

Inventory Purchases

Cash Disbursements for Inventory

Cash Disbursements for S&A

Cash Budget

25% sales collected in current month, remainder following month

AR @ Sept 30 = $45,000

50% inventory purchases paid for in current month

Remainder following month

AP @ Sept 30 = $25,000

Monthly salaries: $15,000

Monthly S&A exp.: $1,200

paid as incurred

Cash @ Sept 30 = $32,000

Other Cash expenditures:

Dividend $2,000 in Oct.

Equipment $30,000 in Nov.

Credit line of $500,000

Borrowing and repayment in $1,000 increments

12% interest rate

Maintain $10,000 bal EOM in checking Begin borrowing balance: $0

Actual Price = AP

Actual Quantity = AQ

Standard Price = SP

Standard Quantity = SQ

(AP*AQ)-(SP*SQ) = Total Variance

Price Variance

(AP*AQ)-(AQ*SP)=

(AP-SP)*AQ

Quantity Variance

(AQ*SP)-(SP*SQ)=

(AQ-SQ)*SP

Total Variances: Material, Labor, VOH

Each total variance is broken down into price and quantity variances

Favorable = Actual less than Standard